Keystone = Jobs

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December 15, 2011

President Obama is refusing to take yes for an answer. House Republicans have rightly acceded to his demand that they keep payroll taxes from rising at the start of the new year. He is nonetheless threatening to veto the bill because it includes other provisions he dislikes.

The Democratic plan to extend a temporary payroll-tax cut pays for it by raising taxes on high earners. The Republican version, just passed by the House, cuts spending instead. The spending cuts include some modest entitlement reforms and a gradual reduction in the maximum term of unemployment benefits from 99 to 59 weeks. The bill also reforms the unemployment-benefit system so that states have more flexibility to control costs and put people back to work. Most notably, the bill pares down onerous EPA regulations, further starves Obamacare of implementation funds, and forces the president into a decision over the stalled Keystone XL pipeline.

That last provision has put Democrats in a bind. Keystone is a fabled shovel-ready infrastructure project, a job creator, and a step on the path to greater energy independence, all of which the president claims are priorities. Obama is delaying a decision in order to court environmentalists. Republicans, by giving the issue greater publicity, are raising the political cost of this pandering  and forcing him to explain why it is more important to delay the pipeline than to approve the tax cut he has been urging in speeches around the country.

The Democrats know that their political position is weak, which is why they are now scrambling to downplay the pipeline issue and attack the unemployment-benefit reforms instead. But there, too, they face a challenge, since the administration says it also supports reducing the maximum term of unemployment benefits, even if it would reduce the maximum term less than the Republicans want.

In the context of the massive and manifold problems facing the country, H.R. 3630 is a small bill. But its components are worthwhile and the package is politically clever. Senate Democrats seem likely to kill the bill. While they have been saying for weeks that they want to cut taxes for hard-working Americans, they evidently consider it less important than stopping a pipeline that will create jobs for those hard-working Americans. We hope they change their minds. If they do not, the Republicans can add another campaign issue to their arsenal.